The Indian government introduced udyam Registration, a new MSME registration platform, on July 1, 2020. The registration procedure was implemented to make conducting business easier. Micro, Small, and Medium Businesses (MSMBs) are businesses that manufacture, process, maintain, or provide services on a small scale.
You can get all the information you need regarding the udyam registration process on our udyam registration portal.
It’s been a year of this Global Pandemic and a year of the hot discussion of MSME too. Although the MSME is an older concept, it took a high rise in the discussions when a lot of businesses were getting disrupted due to Covid-19. Some of the existing entities took this pandemic as an opportunity and explored the new avenues of businesses.
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What exactly is MSME?
MSME stands for Micro, Small, and Medium Enterprises and is a legal name for businesses that fall into one of two categories under the MSMED Act of 2006.
MSME – Is there a distinct legal framework for them?
I saw a lot of uncertainty in the minds of the general public, i.e. those with no financial experience, when answering a lot of questions. The following are the most prevalent misunderstandings:
- Some of the young individuals who wanted to establish a major business requested me to recommend something other than MSME, such as forming a Private Limited Company, since they feel MSME is a topic for those with a limited perspective of business. Looking up at their bewilderment, I advised them to form a corporation because a WhatsApp chat is insufficient to clarify all the facts.
- Another group of people believes that forming a partnership business is easier than going through the MSME process.
The following forms can be used to register as an MSME:
- Persons who form a partnership, a firm, or a group of people (AOP)
- Co-op societies for Hindu Undivided Families (HUF)
Have you noticed anything? MSME encompasses almost all sorts of businesses.
As a result, it is now extremely simple to communicate the initial message that an MSME may be a corporation, a firm, or whatever else you choose. MSME is an umbrella that comes in a variety of colours.
Why is it necessary to register under this Act?
Benefits from Taxation – Yes and no at the same time. No, since there is no particular tax benefit for MSME, which is quite reasonable. Because MSME does not grant you a different legal status, tax benefits are not a topic for discussion. Yes, since MSME-registered businesses can carry over credit for minimum alternative tax (MAT) for up to 15 years instead of the usual ten. As a result, it is unquestionably a competitive advantage.
E-marketplace – Imagine and respond that you are creating a product or providing a service for which you are given a distinct market to sell your goods and services. Of course, a separate market implies less competition for you. So, are you going to go for it or not?
Interest Rates – Almost every successful business or startup is financed by debt, therefore finance is the most important necessity for any company. Because of the reasonable interest rates, businesses prefer secured debt/loans to unsecured debt/loans. Obtaining an unsecured loan is also convenient for some people, which is understandable. In such a scenario, I recommend that my customers ask their lenders to make an investment in their firm rather than a loan. This isn’t the place to debate it.
So, the major idea here is that bank loans become cheaper for MSMEs since the interest rate is lower than for other businesses, and secondly, MSMEs find it simpler to acquire loans.
Subsidies, exemptions, and legislation – Consider the primary costs of running a factory and ask yourself: how would you feel if you were given some assistance in the payment of bills and other obligations? Isn’t it fantastic? Yes, without a doubt.
So, here are some other financial advantages of MSME:
- MSME receives a rebate on patent registration. So, now is the time to learn more and get the rewards.
- If you are starting a business, you will be pleased to learn that MSMEs are eligible for a tax exemption of 100% for innovative businesses. As a result, now is an excellent moment to give your aspirations legal form.
- As I said above, MSMEs are granted a break when it comes to paying and charging their power costs. Individual state governments must make this option. Some people may or may not be willing to make this compromise.
Conciliation and Arbitration – This is a fascinating topic to learn about. Conciliation and arbitration are dispute resolution methods in which a mediator is selected to mediate the conflict. Conciliator and arbitrator are two terms for the same mediator.
Suggested Read- Udyam Registration Portal
Registration Quick Checklist:
Although it is always preferable to employ a professional for the registration procedure, keep the following papers on hand before seeing a professional or having a virtual meeting to make the discussion go more smoothly:
- The applicant’s Aadhaar number
- The applicant’s PAN
- Number of Employees (Male and Female Count)
- GSTIN is not required.
- Bank account information
- Main business activity
- Total investment amount